North American potash producers Agrium, PotashCorp (PCS) and Intrepid gave cautiously optimistic views for fall and first-half 2015 US fertilizer applications despite falling corn prices while presenting at an investor conference today.
Agrium expects North American application rates to be strong in the fall and for first-half 2015 because farmers are likely to cut back on equipment and other discretionary purchases before reducing inputs like fertilizer.
The company said that US fertilizer consumption has held near 20mn t/yr since 1995 aside from a dip in 2009, while corn prices have varied from $2/bushel to more than $7/bushel, citing US Department of Agriculture and International Fertilizer Industry Association figures. Corn futures for December delivery fell below $3.30/bushel today.
"History hasn't proved there has been a significant pull back in (fertilizer) consumption other than in 2009, when fertilizer prices became significantly disconnected with farmer revenue," Agrium chief executive Chuck Magro said.
PCS stuck with its stance that 2015 potash consumption in the US will likely be slightly down, but that the mature market, which it estimated at 10mn t in 2014, will not fall off significantly.
"The US should be at a good, healthy level in 2014. They will continue to replenish those soils (after) a record grain crop," PCS chief financial officer Wayne Brownlee said. "How bad do you think (2015 consumption) will be? Down 2mn tonnes? We don't think so. Is worst case 1mn tonnes? The truth is we don't know."
PCS maintained its 2015 global potash demand outlook of 58mn-60mn t, which would be flat-to-slightly higher than 2014 estimates, with offshore demand growth offsetting any decrease in the US, which the company said makes up one-sixth of the market.
Intrepid pointed to logistics as a factor that should support potash prices into next year despite corn prices having fallen below $3.30/bushel. The US producer expects rail-related impacts on North American potash shipments to be a multi-year issue and has taken steps to reduce logistical risks, including building/leasing warehousing in markets to increase forward-placed inventory.
"What Intrepid is concerned about is to build a fence around our market and making it difficult for others to come in," said Gary Kohn, vice president of investor relations.
Mosaic's closure of its MOP operations in Carlsbad, New Mexico, should aid Intrepid by freeing up trucks for shipments and adding skilled potash mine workers to the labor pool, the company said. Mosaic plans to shut down the MOP mine, which produced about 300,000t MOP in 2013, by year-end.
bh/tdf
Send comments to feedback@argusmedia.com
If you would like to review other ArgusMedia.com content options, request more information about Argus' energy news, data and analysis services.
Copyright © 2014 Argus Media Ltd - www.ArgusMedia.com - All rights reserved.
